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A company has requested clarification on the withholding tax to apply to a bonus to be paid in 2020 for objectives met during a financial year starting in 2019. The Directorate General for Taxes (DGT) has ruled that the bonus constitutes employment income and must be attributed to the year in which it becomes due.
This ruling clarifies the timing for tax reporting and withholding for performance-based bonuses, ensuring that the tax liability aligns with the period of entitlement rather than the period of service.
The tax team reviews your specific situation.
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